Specialist healthcare underwriting agency Tego Insurance has introduced a combined liability package for the aged care sector, after some insurers left the market.

Recent government funding and reforms has led to increased investment, governance and diligence from aged care providers, and Tego CEO Eric Lowenstein says aged care sector cover has been dramatically altered by the Royal Commission into Aged Care Quality and Safety’s final report last year, as well as covid and insurance market conditions.

Several insurers have exited the market, he says, due to the once-profitable product’s current high loss ratio and flat pricing.

"Based on feedback we have received, some insurers were faced with significant costs resulting from the royal commission into aged care and then were met with losses resulting from covid-19 outbreaks across aged care facilities," Mr Lowenstein said.

"In terms of rates, anecdotally we have seen rates double and even triple, with excesses also doubling, plus exclusions for covid-19 and communicable disease outbreaks and the application of/or reduced sub-limits around abuse cover and investigation costs."

The new cover adds to Tego’s product stable of medical practitioners’ individual indemnity insurance, entity medical malpractice insurance, and insurance for disability service and National Disability Insurance Scheme providers and allied health practitioners.

“We’re not burdened with legacy claims and enter the market with a clean book, at a time when pricing reflects historical claims and not the changing risk landscape,” Tego Underwriting Manager David Leach said.

Increased pricing and restrictive policy terms, including higher excesses, sub-limited covers and exclusions, are “becoming the norm,” he says.

“Competition has reduced in the market, giving us the ability to select risks we’re comfortable with on terms and pricing we deem appropriate,” Mr Leach said.

The team conducted extensive research with aged care providers, regulators, auditors and aged care consultants and concluded it was a good time for the agency to enter the market.

Tego cover spans disability and community care, nursing, independent living, retirement village units, residential aged care, respite care and in-home care.

The number of Australians aged 85 and over is forecast to pass 1.5 million by 2058.